Moody's says Latin America holds 40% of copper and 60% of lithium reserves, but regulatory hurdles and a China-dominated processing chain threaten its ability to capture value from the critical minerals boom.
Latin America holds about 40% of the world's copper reserves and 60% of global lithium brine resources. Moody's warned that regulatory challenges, infrastructure gaps and financing constraints could keep the region from turning that geological endowment into a leading critical minerals industry.
Chile, Peru, Argentina and Brazil also have significant deposits of nickel, graphite and rare earth elements. Despite that potential, Moody's said structural bottlenecks, technical hurdles and macroeconomic and regulatory uncertainty continue to hinder development.
Demand for critical minerals is expected to keep rising. Moody's said developing processing and refining capacity remains harder than expanding mining operations, which limits how much value the region captures from the supply chain.
"Policy and regulatory uncertainty remains one of the main risks, threatening delays even for projects that would otherwise be attractive," Moody's said.
Chile benefits from an experienced workforce and infrastructure that could support expanded lithium refining. The agency flagged water shortages, rising energy demand and stricter environmental requirements. Argentina has substantial lithium and copper potential but continues to face infrastructure deficiencies and regulatory uncertainty. Peru retains strong advantages in copper production, although social conflicts and political instability have slowed investment. Brazil stands out for its energy matrix and mineral resources but still faces technological gaps and depends heavily on international partnerships to expand processing.
China maintains a significant competitive advantage after decades of investment in integrated supply chains, large-scale processing capacity, skilled labor and close coordination between government and industry. China accounts for between 60% and 80% of global processing of lithium, cobalt, graphite and rare earth elements. It controls 78% of global cobalt refining, 70% of lithium refining and 92% of rare earth processing.
"New entrants in Latin America cannot replicate this ecosystem quickly. Chile, Argentina, Brazil and Peru each have distinct competitive strengths and weaknesses," the report said, according to Chilean newspaper La Tercera.
The regional market is moving at two speeds, Moody's said. Large mining companies, including Chile's Codelco and SQM and Brazil's Vale, benefit from their scale, experience and access to financing. Smaller and newer mining companies face greater challenges securing capital and long-term contracts, even when they control high-quality mineral resources. On AlphaScala's risk model, MCO, Moody's parent, holds an Alpha Score of 64/100. SQM scores 58/100. Both are rated Moderate.
Patrick Hall, Deloitte's Energy, Resources and Industrials leader in Chile, said Latin America has the conditions to become one of the world's leading suppliers of critical minerals. The combination of large copper and lithium reserves with growing demand from the energy transition and national security concerns positions the region as a strategic supplier, he said. Competition now extends beyond mineral deposits to entire jurisdictions; regulatory or operational obstacles can become decisive barriers to investment.
"We see shorter timelines between discovery and production becoming a strategic priority for governments because of growing pressure to secure critical mineral supplies," Hall said.
He identified four major constraints: permitting and regulation, infrastructure, financing, and productivity and technology. Modern mining requires reliable energy, water, transportation, ports, digital connectivity and processing capacity. Future competitiveness will depend on digitalization, automation and artificial intelligence.
"Critical minerals require large-scale investments and long development timelines. Regulatory certainty and institutional stability will be key advantages in attracting foreign capital," Hall said.
Manuel Reyes, a mining engineering professor at Andrés Bello University, pushed back on the idea that reserves equal leadership.
"Latin America consistently confuses the concentration of geological reserves with actual market dominance. Holding 40% of the world's copper and 60% of its lithium does not provide any real leadership if control of the value chain remains concentrated in Asia," Reyes said.
He said the region continues to operate primarily as a raw materials exporter and lacks the water, energy and technological infrastructure to process a larger share of its mineral production domestically.
"While a greenfield project in the region can take up to 18 years to reach production, the energy transition requires these minerals within a five-year horizon. That gap does not slow global demand. It simply shifts investment toward more agile jurisdictions or accelerates the search for technological alternatives," Reyes said.
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